In both ESPlanner and MaxiFi, the Roth conversion strategies are still "manual" in a sense. The software is not going to iterate 50 or 100 or more times and test out different conversion amounts in different time periods etc. and reveal an answer like: convert this much in these years. Instead, you must enter an amount you want to convert as a special withdrawal from your 401K (causing you to incur the tax) and then indicate a contribution to the Roth for that same amount in the same year and then compare the discretionary spending of the two cases.

I don't know of any rule of thumb to guide this decision about amount or timing. It's possible that this conversion can make a significant difference, especially with big sums, but I've also seen it more often I think only increase discretionary spending by a few hundred dollars a year over the lifetime. May still be worth doing.

There seems to be a lot out there on the web with regard to withdraw strategies--bucket strategy and this or that. I probably think too simply about it but wouldn't one just sell what is high and hang on to what has dipped? And isn't it true that there's no way to know what will be high or low a year from now, 10 years from now, 30 years? Thus, I'm sometimes confused by a customer that asks (not you or what you are asking here) if our software addresses withdraw strategies.

I use the federal tax detail report to guide decisions about Roth conversion. Look at the taxable income in the years during which you would consider conversion. Can you manipulate your income to get below the nearest tax rate bracket without adversely affecting future years? If so, do so; if not, consider making additional taxable IRA withdrawals up to the next tax bracket. Convert the extra income to Roth.

Alternatively, you may believe your future tax rates will be even higher, justifying taxable withdrawals now. Whatever the case, compare the taxable income report with tax brackets to guide your decisions.

PS: I won't be converting. I have no taxable investment accounts to live on before starting SS at 70. I have to withdraw from my IRAs to eat, kicking me into higher brackets already. I'm confident that my future brackets will be lower. To withdraw enough to convert would result in my paying more taxes now than in the future.

Other Products

Disclaimer: ESPlanner and all other products provided by Economic Security Planning, Inc. (referred to hereafter as "we" or "our") are educational calculators designed to give you some input in mapping out your financial future, but should not be acted upon as a complete financial plan. MaxiFi Planner and the creators of MaxiFi Planner and any derivative products are not certified, registered, authorized, or any other type of financial planners. ESPlanner and its derivative products are simply tools for helping you think through your economic futures. Any suggestions should be viewed as informative inputs into your own decision-making with respect to saving and the purchase of life insurance. ESPlanner and its derivative products provide neither economic, financial nor tax advice, which can only be delivered to you by authorized professionals. The Social Security benefit estimates produced by ESPlanner are just that -- estimates. Only the Social Security Administration can tell you precisely the benefits to which you will be eligible or are eligible and the amounts you will receive. The estimates provided here may differ from the correct amounts due to mistakes in our computer code of which we are unaware or because of legislated changes in Social Security provisions of which we are unaware or because of delays in our updating our computer code for changes in Social Security provisions. This material is not intended to provide legal, tax or investment advice, or to avoid penalties that may be imposed under U.S. Federal tax laws, nor is it intended as a complete discussion of the tax and legal issues surrounding retirement investing. You should contact your tax advisor to learn more about the rules that may affect individual situations.